Shares of Jio Financial Services (JSF) hit a lower circuit of 5% on their trading debut on Monday, after listing at Rs 265 per share. The stock's market capitalization fell to less than Rs 1.6 lakh crore, from over Rs 1.68 lakh crore at the start of trading.

The stock is admitted to dealings in the 'T' group securities on BSE, which means intra-day trading is not allowed. JFS shares were credited to eligible shareholders of Reliance Industries (RIL) in a 1:1 ratio. The discovered share price for JFS was much higher than the Street estimates of Rs 160-170 per share.

Jio Financial Services is the newest and second largest non-banking financial company (NBFC) in terms of market capitalization. The company is expected to focus aggressively on merchant and customer lending, thanks to its parent's wide reach in kirana stores. As of June end, Reliance Industries had a total store count of 18,446 with registered customers at 26.7 crore.

Jio Financial Services is currently part of both the Nifty50 and Sensex indices. However, it will be removed from these indices after three days of listing, on August 24. There could be passive outflows on the counter as a result of this, according to Abhilash Pagaria of Nuvama Institutional Equities.

Here are some of the reasons why Jio Financial Services shares may have hit a lower circuit on their debut:

• The stock was priced at a premium to the Street estimates.

• The market is currently volatile, and investors may be cautious about investing in new stocks.

• There could be some concerns about the company's business model.

It is too early to say whether Jio Financial Services shares will recover from their lower circuit. However, the company has a strong parentage and a promising business model. Investors should monitor the stock's performance in the coming days before making any investment decisions.